Testing the FCC’s Net Neutrality Political Calculus

This age old wisdom has survived to warn against human nature — to be overly confident of keeping what one has while risking everything when grasping for much more.

Currently the FCC and congressional Democrats are rejecting the proverbial “bird in the hand,” i.e. proposed net neutrality legislation that would provide the FCC with the legal authority it has sought for seven years, in order to go for the “two birds in the bush,” or maximal perceived authority via unilaterally reclassifying the Internet as a Title II telephone utility.

Such action could result in the FCC losing everything in court or in a change of administration.

Consider the very valuable “bird in the hand” that House Energy and Commerce Committee Chairman Fred Upton and Senate Commerce Committee Chairman John Thune have offered the FCC and congressional Democrats.

The Republican chairmen’s discussion draft legislation gives the FCC all the consumer protection authority the FCC says it needs to enforce net neutrality: no blocking, no throttling, no paid prioritization, and required transparency.

The draft also would change existing law to enable these net neutrality authorities to also apply to wireless, not just wired — something the FCC does not have the authority to do given the plain reading of 1993 law passed by an all-Democrat government.

In return, the Republican chairmen’s discussion draft would prohibit the FCC from reclassifying the Internet as a telephone regulated utility and limit the FCC’s Internet authority only to addressing the problems the FCC has identified over the last twenty years.

And the chairmen have made clear it is a discussion draft subject to compromise and change to gain Democratic support.

The FCC and congressional Democrats have maximal negotiating leverage now. This leverage understandably would evaporate if the FCC were to reject any congressional resolution or bipartisanship, and unilaterally reclassify the regulatory status of the Internet.

In a nutshell, if the draft legislation became law, the FCC would have legal and political legitimacy in enforcing net neutrality going forward, and own authority that a court could not take away like the court did twice in 2010 and 2014.

Now consider the two different ways that the FCC can lose — both the legislatively offered “bird in the hand” and the coveted “two birds in the bush” of un-bounded FCC legal authority — in the 2016 election and in expected court challenges.

If the FCC assumes the commission has the legal latitude to politically reclassify the Internet as a telecommunications utility, future commissions also would enjoy the legal latitude to politically reclassify the Internet back to what it is today — a largely unregulated information service.

Two years out, it’s reasonably about 50-50 which party wins the 2016 presidential election.

Thus there is roughly a 50 percent risk that this FCC’s Title II reclassification is re-reclassified by the next FCC, because the FCC chose to gamble and throw away “the bird in the hand” of permanent legislated authority to legitimately enforce net neutrality.

As for an expected court challenge, the FCC is well aware that the two preceding chairmen, who were lawyers trained at the Harvard and Yale law schools respectively, were 0-2 in trying to persuade the courts that the FCC had existing statutory authority to enforce net neutrality in Comcast v. FCC and Verizon v. FCC.

What are the reasonable odds that current FCC Chairman Tom Wheeler, who is not a lawyer, will fare better in making this inherently legal call and overseeing the necessary legal analysis, strategy, argumentation and precedential justification, to win when the first two attempts failed, and when the FCC is rejecting the court’s explicit Section 706 legal advice in Verizon v. FCC?

What are the reasonable odds that a vastly more complicated Title II court case, that requires repudiating FCC precedents, reversing FCC findings of facts, and implicates more serious constitutional issues than the first two administrative cases, somehow fares better in court than the previous two unsuccessful cases?

To be reasonable, assume the legal outcome is 50-50. Thus there is roughly a 50 percent chance the FCC’s reclassification will be overturned in court a third time.

Add the probabilities of these two gauntlets that this FCC Title II reclassification must survive — a 50-50 presidential election and a 50-50 court review — means a roughly a 25 percent probability that an FCC Title II reclassification would survive past the next few years.

So what does this mean for the FCC and congressional Democrats? Which will still be around and care about consumers, net neutrality and an open Internet in 2017 and beyond?

Do the FCC and congressional Democrats, all of whom enjoy maximal leverage at this point in time, reject “the bird in hand” of permanent legislation to enforce all currently known net neutrality violations, or do they risk the roughly 75 percent probability that they could lose all authority to enforce net neutrality after 2017?

Wouldn’t consumers want a “bird in hand,” bipartisan, legitimate, and permanent resolution that puts their interests and protection above “two birds in the bush” politics?

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.